UPDATE: Fugro Keeps Profit Outlook, But Sees Lower Revenue

Oil services company Fugro NV (FUR.AE) Thursday stuck to its full-year profit outlook, but said revenue will be lower than it previously forecast, partly due to price pressure as the market for oil and gas exploration activities is facing overcapacity.

Fugro said it expects full-year net profit to be around EUR260 million, down from EUR283.4 million in 2008. The company forecasts full-year revenue of around EUR2.05 billion, down from EUR2.15 billion in 2008. Previously, Fugro forecast a revenue figure of around the same level as last year.

The Dutch company, which, among other things, provides seismic data analysis to the offshore oil industry, said full-year revenue will be lower due to pricing pressure in its exploration activities for the oil, gas and mining industries. Furthermore, the top-line figure was impacted by the termination of the charter of two seismic vessels, it said.

Fugro's statement echoes comments from Norway-based peer Petroleum Geo-Services (PGS.OS), which last month also gave a rather cautious market outlook.

The seismic industry is hurt by overcapacity as many oil and gas companies have slashed investments in exploration activities in the wake of lower energy prices.

In August, Fugro, which generates around 75% of its revenue from the oil and gas sector, said that the higher oil price has not yet resulted in a resumption of postponed exploration and future production projects.

Still, the company said Thursday that tender activity for new projects is picking up and that big oil and gas companies continue to invest in long-term development projects.

KCB Securities analyst Lucie Vermaut said this could help the company to offset pricing pressure, but only "to a certain extent." Vermaut has an accumulate rating on the stock.

Meanwhile, SNS Securities analyst Danny van Doesburg was positively surprised that Fugro managed to keep its profit outlook despite a lower top-line guidance. "Fugro's trading update underlines the flexible cost structure of the company." Van Doesburg kept his hold rating on the stock, partly due to an improved outlook for the oil services industry in 2010.

Still, at 1122 GMT, Fugro shares traded 2.3% lower at EUR39.09, underperforming a 0.6% drop in the AEX market in Amsterdam.

Company Web site: www.fugro.com

-By Maarten van Tartwijk; Dow Jones Newswires; [phone]; [e-mail]